LIC may participate in bank recapitalisation programme

Published: 29th October 2017 12:19 PM  |   Last Updated: 29th October 2017 07:12 PM   |  A+A-

An exterior view of Life Insurance Corporation of India's (LIC) headquarters is seen in Mumbai | Reuters

By PTI

NEW DELHI: Centre-owned Life Insurance Corporation may be roped in to participate in the Rs 2.11 lakh crore recapitalisation initiative for public sector banks (PSBs).

As part of the programme, LIC could also increase its stake in various PSBs which are required to raise Rs 58,000 crore from the capital market, sources said.

Besides, they said, LIC could participate in a non operating holding company (NOHC) structure to which the government may transfer its share in various PSBs (rpt) PSBs.

NOHC could then issue recapitalisation bonds worth Rs 1.35 lakh crore.

However, government has said that nature of bonds and who will issue them would be decided in the due course.

Finance Minister Arun Jaitley last week said that there were multiple options before the government for recap bonds and they are being examined and the best ones would be explored.

LIC in the past has pumped capital in PSBs through preference share allotment and Qualified Institutional Placement (QIP).

Earlier this year, Bank of India issued preference share to LIC worth Rs 451 crore. Similarly, UCO Bank, IDBI Bank, United Bank of India, Dena Bank and Indian Overseas Bank also issued preference shares to LIC in the past few years as part of their effort to shore up their capital.

In the recent Rs 15,000 crore QIP placement by the countryÂ’s largest lender State Bank of India (SBI), LIC was one of the largest participants. It picked up shares worth over Rs 5,800 crore or 38.6 per cent of the total.

Sources said that if there is LIC participation in the government recapitalisation initiative, it would be as per the regulatory investment ceiling fixed by the Insurance and Regulatory Development Authority of India (Irda). PTI DP CS SA ABM BAL .

This is unedited, unformatted feed from the Press Trust of India wire.

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  • susanta Kumar jena

    LIC should infuse capital in PSBs and other companies which are profit making. otherwise LIC will come down from no.1 if investment made in loss incurring companies. policy holders are demanding more bonus
    4 months ago reply